What You Need to Know about TV Star Contracts

Television actor deals are frequently set up as an agreement to test the
actor for the pilot, with the Producer having an option to engage her
services for the pilot and the Series, if ordered by the Network. The
Producer's goal is to lock up the exclusive services of the talent at
the earliest stage possible. This way, the Producer already has the
talent obligated, at the Producer's option, to render services for
prenegotiated compensation (thus, the talent can't hold up the Producer
for more money). Accordingly, the Producer will want to require talent
to sign a test option agreement at the time when the Producer has the
most leverage -- before the actor goes in for the test.

2. Pilot Option
One of the first points negotiated by the parties is the time period in
which the Producer must exercise its option to use the actor in the
Pilot. The Producer will want as much flexibility as possible (and,
obviously, the talent will want to know within a matter of only a few
business days so she can plan her professional schedule).

3. Series Option
A. Timing: As with the Pilot option, the talent will want the Producer
to exercise the Series Option quickly. Producers usually agree to make
such a determination within a certain number of business days (10 for
example) after the Producer's written acceptance of the Network order
for the Series.

B. Series Relocation Fee: If, at the time of the option for the first
year of the Series, the performer is living permanently outside of the
production location, the Producer will likely be asked to pay a Series
relocation fee in an amount to be negotiated.

C. Number of Optional Years: Producers typically seek to lock up talent
for up to either 6 or 7 years of a Series. The options are consecutive
and generally each for a 1 year.

D. Initial Season: Series contracts usually have an initial option
period for the first year of the Series that runs until the end of June,
allowing for enough time for the New York Announcements (where the
Networks announce which pilots/series they are picking-up). In most
cases, the Producer will provide that for an additional payment the
option is subject to extension until the end of December (to allow for a
mid-season pick up for a show).

E. Subsequent Seasons: After the first year, the option exercise date is
usually set for the middle of June (allowing for the NY announcements of
series renewals).

F. Exclusivity of Option/Priority: Typically the Producer will require
that the option, and the actor's services in the area of television, are
exclusive to the Producer. However, there are a few related points that
are commonly discussed:

(i) Sometimes the Producer will not make the option exclusive, but will
allow the talent to test for other pilots as long as the exercise of the
series option by the Producer gets a priority position. Thus, if the
Producer's series gets picked-up, the talent is obligated to be in such
Producer's series (regardless of what happens with any other pilot for
which the actor tested).

(ii) Additionally, if the deal is for a cable series, the Producer may
be willing to discuss shorter option periods. Cable series usually do
not function on the same time schedule as network series. Thus, when a
cable producer is locking-up a talent's services, it may not be to the
exclusion of testing for network pilots. Accordingly, the option periods
can be different and, in turn the Producer can negotiate for a lower
pilot fee (arguing that Producer is not tying up the talent to the
exclusion of network pilot opportunities).

(iii) If a star's option is picked up, she will seek to carve out
voiceover work and television guest appearances on other shows
(including MOWs and mini-series). The Producer may be willing to agree
to a limited number of carve outs so long as the role is not similar to
that of the character the actor is portraying on the Series. It is
currently being argued by talent representatives that the standard
exclusivity provisions should not prohibit talent from starring in
webisode series on the Internet. To the extent that Producers desire
this exclusion, Producers are advised to specifically restrict the
talent's services in webisodes.

4. Compensation
A. Pilot Compensation: The compensation for the Pilot is usually no more
than double the episodic compensation (i.e., Rs 150,000 for the pilot if
the episodic rate is Rs 125,000). Usually this double ratio is the
attempted starting point by talent in the negotiation; however, they
usually are offered less by the Producer.

B. Series Compensation:

(i) The test option contract specifies the compensation that the talent
will receive if the option is exercised. The talent's representatives
will want to specify that the compensation is on a "pay or play" basis
(owed to the talent even if the actor's services are not used or
required).

(ii) Depending on the level of the star and the size of the role, the
Producer will be asked to guarantee compensation for a minimum number of
episodes (the number of episodes guaranteed may be lower in the initial
years, and increase over the life of the Series). Typically, a full
season means an order of 22 episodes. For the initial year, the Pilot
should count as 1 of the guaranteed Series episodes. Next, the Producer
may be asked to set the ratio of episodes for which talent is guaranteed
compensation, such as ASP (all shows produced), 10/13, or 7/13. The
bigger the star/role, the better ratio the talent can obtain. If it is a
22 episode order, 10/13 = 17 episodes, 7/13 = 12 episodes. Obviously, if
a star appears in more episodes than the ratio, she will be paid for
each additional episode on which she renders services.

(iii) Additionally, some producers break out a portion of the episodic
compensation to cover foreign residuals that would otherwise be owed
pursuant to SAG. This amount is treated as prepayment of these
residuals.

(iv) The agreement generally sets forth pre-negotiated increases per year
for the episodic compensation, usually a set percentage per year (5% is
fairly customary).

(v) Backend compensation is beyond the scope of this summary and will be
addressed in the Legal Elite program on television proceeds definitions.
Nevertheless, depending on the level of talent, the "star" may be able
to obtain a percentage of the Producer's backend in addition to her
fixed compensation.

5. Credit
Credit is sometimes as, if not more, important than compensation. The
negotiated points are position (first, second, etc.), shared vs.
separate card, and location (whether in the main/opening titles or in
the end credits). Star talent will also want to be accorded credit in
paid ads for the Series. The Producer will want to clarify that all
other credit matters are within the Producer's sole discretion.

6. Rights
The agreement must clearly specify that the Producer owns all of the
results and proceeds of the talent's performance (on a work-for-hire
basis). The Producer must completely own all aspects of the character

7. Name And Likeness
The Producer will want broad rights to use the talent's name, voice,
likeness, etc. in connection with the Series, advertising of the Series,
advertising of products or services of Producer and/or the Network's
commercial sponsors (i.e., commercial tie-ins and point-of-purchase
campaigns), exploitation in new media (i.e., internet, cd-rom, etc),
merchandising, literary and music publishing, and sound recordings and
jackets. The talent will seek to place limitations on the Producer's use
of her name and likeness such as attempting to obtain various levels of
approvals or consultations on particular categories of usage; and, with
respect to permitted usage, talent may seek to obtain "separate pot"
participations for merchandise (5% of the Producer's net merchandising
receipts is not uncommon, the royalty may be reduced if an item of
merchandise depicts 2 or more cast members)

8. Promotional Services
The Producer will want to obligate the star to render promotional
services in connection with openings, closing, lead-ins and lead outs
for episodes and other promotional and institutional appearances.
Promotional activities may be subject to the performer's professional
availability. The Producer will seek to obtain the maximum amount of
promotional services for no additional compensation (or for scale).
Talent lawyers seek to have these services rendered at a multiple of
scale

9. Perks
Test travel, accommodations, and per diem; and, Series dressing
facilities, hair, make up, wardrobe, etc. are items that are also
negotiated in connection with the test option. Rather than getting
bogged down with negotiations on these points with a number of actors,
the Producer will frequently offer "perks" consistent with the budget
and indicate that the cast will be treated on an "MFN" or "most favored
nations" basis (in other words, an actor who is the beneficiary of an
MFN provision will be treated no less favorably than any other cast
member with respect to the applicable "perk"). While an "MFN" provision
can facilitate closure of a deal, it can also lend to increased costs
across the board in the event the Producer ultimately agrees to "bump
up" the perks for another actor.

10. Continuing Series
Even though a test option agreement might cover an actor's services for
up to 6 or 7 years, talent on a successful Series will likely seek to
renegotiate certain aspects of the deal, and Producers engage in such
renegotiation to keep their stars happy and to lock in the talent for
further additional seasons of the Series.

Disclaimer:This discussion is general in nature and is not intended to
and does not create a lawyer/client relationship. This discussion should
in no way be relied upon or construed as legal advice, particularly
since most legal outcomes are highly dependent on the facts of a
particular case or situation. This discussion is provided on the
condition that it cannot be referred to or quoted in any legal
proceeding; if this condition is unacceptable to you, immediately delete
this email and do not keep a copy of it in any form. The reader or
recipient is strongly urged to consult with a lawyer for legal advice on
these matters. Any reliance on the discussion information by someone who
has not entered into a written retainer agreement with the lawyer
providing the discussion information is at the reader's or recipient's
own risk.

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